On taxes and other obligatory payments to the budget (Tax Code)

Article 660. Conditions of application of an international treaty

1. The provisions of an international treaty regulating the avoidance of double taxation and prevention of tax evasion, to which the Republic of Kazakhstan is a party (hereinafter referred to as an international treaty), shall apply to persons who are residents of one of or both states that have entered into such a treaty.

2. The provisions of paragraph 1 of this article shall not apply to a resident of a state, with which an international treaty is concluded, if this resident uses the provisions of this international treaty in the interests of another person who is not a resident of the state, with which an international treaty is concluded.
Article 661. The order for applying an international treaty

The provisions of an international treaty are applied in the manner prescribed by this Code and a relevant international treaty.
Article 662. The order for recognizing managerial and general administrative expenses of a non-resident legal entity as deductibles for the purposes of taxation of income from sources in the Republic of Kazakhstan

1. If the provisions of an international treaty allow recognizing managerial and general administrative expenses of a non-resident legal entity as deductibles (hereinafter referred to as allocable expenses of a non-resident legal entity) when determining taxable income of a non-resident legal entity from activity in the Republic of Kazakhstan through its permanent establishment, the amount of such expenses shall be determined by such a non-resident legal entity using one of the following methods of its choice:

1) the method of proportional distribution of expenses;

2) the method of immediate (direct) allocation of expenses to deductibles.

For the purposes of this article and Articles 663, 664 and 665 of this Code, allocable expenses of a legal entity are recognized as managerial and general administrative expenses of a non-resident legal entity related to the performance of its activity in the Republic of Kazakhstan through a permanent establishment that are actually incurred both in and outside the Republic of Kazakhstan.

At the same time, the expenses of a non-resident legal entity shall not include:

managerial and general administrative expenses incurred directly by a structural unit of a non-resident legal entity, whose activity resulted in the formation of a permanent establishment in the Republic of Kazakhstan, or a permanent establishment of a non-resident legal entity without opening a structural unit in the Republic of Kazakhstan, which are recognized as deductibles in accordance with Articles 242 - 273 of this Code (hereinafter referred to as managerial and general administrative expenses of a permanent establishment in the Republic of Kazakhstan);

managerial and general administrative expenses incurred directly by structural units or permanent establishments of a non-resident legal entity in other countries, not related to the activity of a permanent establishment registered as a taxpayer in the Republic of Kazakhstan (hereinafter referred to as managerial and general administrative expenses of permanent establishments in other countries);

managerial and general administrative expenses of a non-resident legal entity that are not related to the activity of a permanent establishment registered in the Republic of Kazakhstan.

2. Managerial and general administrative expenses are expenses related to the management of an organization, labor remuneration of managerial staff, not related to manufacturing process.

3. Within a reporting taxable period, a non-resident legal entity shall choose and use only one method of recognizing allocable expenses of a non-resident legal entity as deductibles of its permanent establishment.

The method used by a non-resident legal entity to recognize allocable expenses as deductibles is indicated in an annex to a corporate income tax declaration containing information on managerial and general administrative expenses of a non-resident legal entity recognized as deductibles.

4. A permanent establishment in the Republic of Kazakhstan recognizes allocable expenses of a non-resident legal entity as deductibles in case of:

1) compliance with the provisions of an international treaty;

2) presence of documents specified in paragraph 3 of Article 663 or paragraph 3 of Article 665 of this Code;

3) presence of a document confirming the residency of a non-resident legal entity.

5. If the documents, specified in subparagraph 2) of paragraph 4 of this article, are drawn up in a foreign language, it is mandatory to have such documents translated into Kazakh or Russian and notarized in the manner prescribed by the legislation of the Republic of Kazakhstan.

6. A document confirming the residency shall be submitted by a non-resident legal entity to a relevant tax authority within the time limits established for submitting a corporate income tax declaration.